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Breaking Ranks: Garlock Reaches Unprecedented Deal with Future Claims Representative on Value of Trust for Asbestos Claims
21 January 2015
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On January 13, 2015, Garlock Sealing Technologies LLC announced that it had reached an agreement with the representative for future asbestos claimants that would settle all present and future asbestos claims against it. The agreement was announced one year after the Bankruptcy Court for the Western District of North Carolina ruled that Garlock’s liability is only a fraction of the amount alleged by current and future mesothelioma claimants. It provides more than the amount the bankruptcy court held would be sufficient to cover Garlock’s liability, but far less than what claimants had been seeking.
The Asbestos Claimants Committee (“ACC”), which represents the interests of current asbestos claimants, did not participate in the agreement. This appears to be the first time that a Future Claims Representative (“FCR”), which represents the interests of future asbestos claimants, has broken rank with the ACC.
The first-ever agreement between a debtor and the FCR independent of the ACC – especially one for substantially less than the amount claimants had been seeking – is a significant development in asbestos-related bankruptcy proceedings and could have a substantial impact on how asbestos claims are negotiated in the future.
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